FRM Part II · FRM Exam Part II · Risk Reporting
The chief risk officer reviews the format of the operational risk report annually. Which finding from the review most clearly indicates that the report needs to be redesigned?
The report needs redesign when users cannot identify the top risks and required actions because of volume and lack of prioritization. Effective reports are clear, relevant and action-oriented. Thresholds with trends, predictable schedules and stated data sources are good features rather than weaknesses.
- AKey risk indicators are shown against thresholds with trend arrows and commentary on breaches
- BBoard members report that the 60-page report lacks prioritization, so they cannot identify the top emerging risks and the actions requiredCorrect
- CThe report is produced on a fixed calendar that is known to all recipients
- DThe report states the data sources and the date through which the data are current
Explanation
A report that buries key messages in volume fails its purpose of supporting decisions. Reviews should check relevance, clarity, prioritization and actionability. The other options describe desirable features: thresholds with trends, predictable timing and data transparency.
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